Dáil Éireann Debate, Thursday - 22 June 2023
222. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which this country remains in a safe position in terms of borrowing to meet the current international crisis; and if he will make a statement on the matter. [30451/23]
View answerThe National Treasury Management Agency has advised me that sovereign borrowing costs have increased in the last 18 months as global central banks, including the European Central Bank, tightened monetary policy somewhat faster than had been expected in response to significant inflationary pressures. At the start of 2022, Ireland’s 10-year government bond yield stood at c. 0.2%. By the end of 2022, it had increased to over 3%.
Despite this upward shift in borrowing costs, the 2022 interest bill on Ireland’s General Government Debt, at €3.3bn, was largely unchanged on the 2021 position. Moreover, April’s Stability Programme Update 2023 estimates that the interest bill is to remain relatively stable over the period 2023 to 2026, at between €3.3bn and €3.5bn per annum.
This stability is due to several factors which mitigate the impact of higher yields. These mitigants include Ireland’s low average cost of debt (estimated at 1.4% in 2022), strong cash and liquid asset balances, and limited issuance/refinancing needs owing to the improved fiscal position and long average life of the debt portfolio.
So far this year, the National Treasury Management Agency has issued €6bn of bonds, from a target funding range of €7bn to €11bn. Investor demand remains strong for Irish sovereign debt.
